What To Do When You Find Yourself In Financial Debt
By | Sheryl Wright
Financial debt is one of the most frustrating and unnerving things that can happen, yet it happens to many people. According to Bankrate, consumer debt in the US is currently more than $14 trillion. That means a whole lot of people have found themselves in the same situation you’re in if you’re having debt problems right now. Fortunately, there are ways you can get out of it. Each method has its own timeline, but it can eventually get you back on your feet and to financial health. Here are some suggestions.
Stop Racking Up Credit
The first step to take if you want to get out of debt is to stop racking it up immediately. Take cash to the grocery store, create a budget you can afford, and stop relying on credit. You have to know when to fold and start cutting your credit card usage down. Make ceasing credit card usage number one on your “to-do” list today.
It’s the best option before moving forward with a credit lawyer. Professionals are the best call to make when in doubt and not so sure about what to do. If there are strategies out there for you to follow and release debt weight, skilled lawyers are the ones who have them.
Pick Up an Extra Job or Hours
The next thing you need to do to get out of debt is to earn additional money. The money will help you pad your credit card payments with extra so that you can pay down your debt faster. Sit down and create a plan that involves dedicating a certain amount of cash to paying off your debt. The figure you choose is up to you. It can help, even if it’s a small amount like $25 a week. Make a plan to put away what you can afford and then make another plan to earn the extra money. You could ask your boss to give you more hours at work, or you can pick up a second part-time job until you get your finances back in order.
Bankruptcy is one solution you can consider. There are benefits to it and disadvantages to it. One benefit is that filing for it will cause the creditor phone calls to stop immediately. Another benefit is that you won’t have to pay your debts if the court decides that you qualify for a Chapter 7. The downside is that the bankruptcy can stay on your report for up to 10 years. Furthermore, it costs money to do a Chapter 7. you may have to come up with thousands of dollars to pay an attorney.
Try a Debt Management Plan
A debt management plan is an interesting solution that might have you out of debt within five years. With a DMP, you pay a third party company a monthly fee plus a figure that you and your counselor agree to distribute to your creditors. The DMP will take the burden from you of having to pay all of your bills by yourself. You can allow the counselor to do it and focus on working to earn money.
Try Debt Settlement
You may have vaguely heard about debt settlement and always wondered, “What is debt settlement?” It’s a process that can be quite effective if the right person does it for you. It’s a process by which the debtor and the creditors agree to settle the debt for less than what the debtor owes. It has some positive aspects, such as the ability to cut down the debtor’s expenses immensely. However, the downside is that debt settlements do not always end on a positive note. Most debtors want the negative information removed from their credit reports, or they don’t see a benefit in paying them off. Removal of the negative credit item is not always granted. To avoid getting taken advantage of, you should use a reliable debt settlement negotiator and get the creditor’s intent on paper.
You could opt to do a consolidation if your credit score isn’t too bad. A debt consolidation loan will allow you to pay off all your debts so that you only have the consolidation company to pay and no others. It could help you by offering you a lower interest rate. However, your credit score has to be at least fair to qualify. Most lenders want you to have good credit before they offer this type of loan.
Grab Hold of Your Debt Today
Don’t give up on your finances. Consider one of these suggestions to get back on your feet. Many people have used them and have succeeded in doing so. You might be the next person to recover from debt problems.